Home-grown FMCG company CavinKare is planning to tap equity markets in the next couple of years. This was revealed by CK Ranganathan, Chairman and Managing Director of the privately held company that introduced path-breaking innovations such as shampoos being sold in sachets.

“The next phase of our growth is likely to come through inorganic growth and to fund that we will come out with a public issue sometime in 2020,” he said, while speaking to a select group of journalists at his office. He also hoped that the company, which is in seven different business segments ranging from personal care, beverages, milk products, snacks and saloons, will be valued in excess of $1 billion.

CavinKare closed the year 2017-18 with a revenue of ₹1,600 crore against ₹1,300 crore in the previous fiscal. He said that profits were also growing but did not disclose the numbers as they are being audited. He expects the company to cross ₹2,000 crore turnover in 2018-19. The personal care business is its largest and accounts for over 60 per cent of the revenue.

R&D spend

He attributed the company’s success to its strong R&D and innovation mindset. “As much as 45 per cent of our products in the personal care space is uncontested,” he said giving the example of Meera Powder, Meera Shampoo or the hair colour that can be washed in 10 minutes or the shampoo hair colour. Such positioning, he added, gave the company a competitive edge and enabled it to price the products profitably. It spent 2.5 per cent of its revenue (₹32 crore) on R&D.

The company has also had its share of product failures. As a policy it culls products which do not scale up. “We kill products whose revenue do not reach ₹10 crore in three years,”he added. So far it has withdrawn 13 products that have failed to meet the expectations of the market.

Ranganathan said the company operated on a very simple product philosophy. “Launch a product only if it is a clear winner over competition or one that has a clear differentiation. We do not launch ‘Me too’ products at all, “ he said. The company, he claimed, has scores of patents and as much as 25 per cent of them are in use in various products. It has a strong innovation pipeline and launches four or five products every year in each business.

Last year the company re-structured its business and today all the seven businesses have been made into strategic business units and are headed by professionals. “The new management structure should help us grow,” he added.

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